Fire department eyes I-722Capital projects would be imperiled if the tax-relief measure is upheld.
June 9, 2008 · Updated 3:21 PM
"If tax-cutting Initiative 722 goes into effect this year while its constitutionality is being challenged, the Bainbridge Island Fire District is in good shape to absorb the revenue loss.But if the measure is upheld, the district will need to find new sources of revenue for its capital program.The revenue losses would put a strain on our facility-upgrade and vehicle-replacement program, fire district director Ken Guy said.The dollars that would be lost would not cut into the operational budget, he said, which makes short-term adjustments possible.You have some discretion in the short run about the timing of your projects. But in the long run you still have to replace your equipment, he said.The Tim Eyman-sponsored tax-cutting initiative rolls back property valuations to 1999 levels, caps any taxing entity's annual revenue growth at 2 percent per year, and limits the increase in property valuations to 2 percent per year or the rate of inflation, whichever is lower. The measure also voids any tax increases enacted after July 2, 1999, and requires a refund of that money.The City of Bainbridge Island and a number of other municipalities have filed suit, claiming that I-722 in unconstitutional. The gist of the city's argument is that I-722 impermissibly contains multiple provisions, some of which are unconstitutional in and of themselves. The city argues that the whole measure must be declared invalid because a court cannot determine whether the voters would have passed the measure without the unconstitutional provisions.A previous Eyman initiative, I-695, was struck down last month by the Washington Supreme Court for containing multiple topics, among other reasons.The anti-722 suits have been consolidated in Thurston County. A hearing is tentatively set for Nov. 27, on the requests for an injunction to prevent I-722 from taking effect pending the final resolution of the constitutional litigation.If we are forced to live with I-722 for one year, it won't be too bad, Guy said. We will lose roughly $122,000. But we can save that by slowing down our plans to remodel the Madison Avenue station.Guy said that in 1992, when the fire district last sought approval of a levy lid lift, it basically made a deal with the voters. District officials promised not to come back to the voters for 10 years to seek more taxing authority, but said they would take the maximum permissible annual revenue increase, which was then 6 percent per year.What we have done is funded our capital projects on a pay-as-you-go basis with that revenue stream, Guy said.If I-722 is upheld, the permissible rate of annual increase falls from 6 percent annually to 2 percent. And in the long run, that means trouble for the fire district.The island population has been growing at about 4 percent per year, Guy said. While fire calls have not gone up that fast, emergency service calls have grown at about the same rate as population growth.Guy's projections show a growing gap between the revenue I-722 would allow and the projections without that limitation. From the relatively modest $122,000 loss in 2001, the gap grows to $927,000 by 2005 and to $1,457,000 by 2010.That's about the size of our entire capital budget in those later years, Guy said.His plan, if the initiative takes effect, is to seek relief from the voters. At present, the district levies taxes at a rate of $1.28 per $1,000 of assessed valuation.The law gives fire districts that authority to tax at a rate of up to $1.50, so we have some room to move, Guy said.Another possibility is to form a separate district for emergency medical services, which can tax at a rate of up to $0.50 per $1,000 valuation.Most departments that offer both fire and emergency services are separated into two taxing districts, Guy said. Our property values on the island have been going up fast enough that we can provide both services with our $1.28 rate. But this is a possibility we would have to consider at some point.Creating a separate taxing district could increase revenues by about $1 million per year - about what we lose from 722, Guy said.Even though voters would have to approve of any new district or tax-limitation lifts by a 60 percent margin, Guy is optimistic about voter approval of increases, should that become necessary. Our last bond request in 1992 was approved by something over 70 percent, Guy said. I think the people on the island believe they get value for their tax money. "